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This article from the St. Louis Post Dispatch says that malpractice claims and payoffs are at all time lows in Missouri. The insurance campanies jacked up insurance prices for a "predicted" increase and payoffs, and now they're making big bucks. This article is interesting because it challenges the notion (which I once held) that the key to keeping rates low is to have pain and suffering caps.

Now, will the "market pressures" decrease malpractice insurance rates for us? If not, it looks like caps should only be one part of a larger answer.

Malpractice claims hit lows in 2003
By Judith VandeWater
Published: Friday, Apr. 16 2004

The Missouri Department of Insurance said Friday that medical malpractice
claims filed and paid in 2003 fell to all-time lows.

The drop in payouts combined with the hefty premium increases in recent years
give liability insurers a "cash-flow windfall," department director Scott Lakin

Licensed medical-malpractice insurers paid out 38 cents for every dollar in
premium they collected from physicians last year, the department said.

The medical-liability insurance companies that report to the department expect
future settlements and verdicts to claim 90 cents of the premium dollar paid in
2003. By comparison, they expect to pay $1.17 for every dollar collected in
premiums in 2002, according to the department.

Lakin said the downward trend in loss ratios in 2003 is a signal that
if Missouri malpractice insurers had experienced a financial crisis, their
troubles have passed.

Lakin said the data also indicate the end of a painful insurance cycle. Rates
and premiums continue to go up at the end of the cycle, but the amounts paid as
claims by companies return to historical levels. This increases insurers'
profitability, which, in turn, attracts competitors. The arrival of new
companies triggers a price war to gain market share. This rate discounting sets
off another insurance cycle.

Dr. Norman Druck, president of the St. Louis Metropolitan Medical Society, said
there's no sign of premium-rate relief for doctors. Though the state reports
that Missouri physicians had average premium increases of 18 percent last year,
Druck said he doesn't know a single doctor who fared that well. Some physicians
have absorbed premium hikes greater that 150 percent.

"If insurance companies are making so much money, why do we have no new
companies selling insurance in this state?" Druck said.

Missouri insurers have said the recent premium increases were fueled by
uncertainty about future liability. A court decision in 2002 shattered a
longstanding cap on the non-economic damage portion of liability verdicts in
the state. Malpractice insurers said they raised rates to increase their
reserves against their increased exposure to large judgments and settlements .

Randy McConnell, a spokesman for the insurance department, said insurers have
told the department that their fears have yet to come to pass. McConnell said
the court decision lifting the cap on non-economic damages increased
malpractice liability payouts by only 1 percent in 2003.

A tort-reform bill passed out of a legislative conference committee late
Thursday night would restore the cap and fix it at $400,000 per claim. The old
cap had an inflation adjustment and had risen to $565,000.

McConnell said the Insurance Department released its malpractice claims report
Friday because the Legislature is considering major changes in liability laws.
Missouri Gov. Bob Holden vetoed the 2003 reform legislation because it extended
broad protections to non-medical industries.

Last year, new claims filed against health-care providers, an indicator of the
number of future settlement payouts, were at the lowest in more than 15 years,
the department said. Claims filed against physicians fell 13.8 percent to 665
in 2003. The previous low was 704 in 2001.

McConnell said the claims-filed data include self-insured hospital systems and
health-care providers that buy coverage from liability insurance companies.

Settlements or jury verdicts were awarded in 448 cases in 2003. Of those, 229
were proceedings with physician defendants.

Average payments per claim fell slightly overall to $207,068 last year.

Terry Ganey of the Post-Dispatch contributed to this report.

Reporter Judith VandeWater
E-mail: [email protected]
Phone: 314-340-8201


life is good
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15+ Year Member
Jun 6, 2002
Attending Physician
Compare the last 2-3 years with the early 80's (adjusted for inflation). Then post your findings.

There are some excellent discussions on medical malpractice in the Emergency Medicine forum. I encourage you to take a look.

A recent article in American Medical News (published by the AMA) reports that previous thoughts of high malpractice rates being secondary to poor investment decisions by malpractice insurers are not true. Jjudson posted some things to dispute this, although they are quite lengthy.

So what to make of all this? Each side posts its own figures to support its position. I wonder what the figures would be if you collectively looked at everything as opposed to certain states, specialties, groups examining the suits, etc.?
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